Employment trends suggest that the demand for hospital nursing personnel has gone through substantial changes during the 1980's. While hospitals hired greater numbers registered nurses (RNs), employment of licensed practical nurses (LPNs) and nursing assistants (NAs) was reduced. The hospital industry has explained the increase in demand for RNs by asserting that patients are sicker. Increasingly complicated technology and reduced lengths of stay have resulted in a greater volume of intensive care, requiring more skilled workers. Given that hospital services have changed, it therefore, seems reasonable that labor needs may also be changing. The aim of this study is to analyze determinants of hospital demand for nursing personnel utilizing a cross-sectional sample of 800 hospitals from the American Hospital Association (AHA) Nursing Personnel Survey (1989). Demand analysis will provide the framework for looking at two issues: 1) What variables are associated with increasing employment and wages of RNs relative to LPNs and NAs? 2) And given these variables, to what extent are hospitals substituting RNs for LPNs and NAs. Three types of equations will be estimated, each providing a different perspective on the substitution of nursing personnel.